New Reports Suggest Economic Expansion
New orders for costly manufactured goods dipped in July, the Commerce Department said Tuesday, though industry reports showed brisk sales of existing homes last month and soaring consumer confidence in August.
Analysts said the three separate measures of economic activity suggest steady expansion in the third quarter and into 1998, buoyed by robust business investment and consumer optimism about job opportunities.
For the record:
12:00 a.m. Aug. 28, 1997 For the Record
Los Angeles Times Thursday August 28, 1997 Home Edition Business Part D Page 3 Financial Desk 2 inches; 55 words Type of Material: Correction
Consumer confidence--Due to an editing error, information about the Conference Board’s index of consumer confidence was omitted in a story Wednesday. The board’s index rose to 129.1 in August from 126.3 in July and is near a 28-year high. The consumer confidence index, calculated from a 1985 base of 100, is derived from responses to survey questions sent to 5,000 households nationwide.
In California, the median price of a single-family home in July posted its biggest increase in more than seven years.
The Commerce Department said total orders for durable goods--costly items such as cars and refrigerators intended to last three or more years--fell 0.6% last month to a seasonally adjusted $180.5 billion.
But the decline was strongly concentrated in aircraft and parts, and several other categories posted order pickups from June.
Bond prices initially reacted negatively to the news, apparently on fears it meant the economy was growing rapidly enough to fire up inflation.
But the bellwether 30-year Treasury bond rebounded to end the day higher, pushing its yield down to 6.64% from Monday’s 6.67%. Bond prices and yields move in opposite directions.
Stock prices, though, dropped for a fourth straight day, with the Dow Jones industrial average falling 77.35 points to 7,782.22 in listless summer trading.
Analysts focused on a 5.3% increase in July for new orders for non-defense capital goods excluding aircraft, which are seen as an indicator of corporate spending plans. The increase followed a 3% rise in June and topped orders for July 1996 by a solid 11%.
Other key economic sectors, notably housing, also appeared to have considerable momentum at midyear.
The California Assn. of Realtors said the median price of a single-family home in California rose 5.7% in July from the year before, the largest increase since January 1990.
The rise of the median home price to $192,814, from $182,416 in July 1996, was fueled by 8.5% and 7.7% gains, respectively, in Orange County and the San Francisco Bay Area, the association said. The Los Angeles area lagged with a 0.9% increase.
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Durable Goods
New orders, in billions of dollars, seasonally adjusted:
July: $180.5
Source: Commerce Department
